NAB hoses down shake-out fears

New NAB boss John Stewart has told stockbroking analysts and big investors he hopes to avoid write-downs or restructuring charges in his efforts to turn the bank around - as the market yesterday speculated that charges running into hundreds of millions of dollars may be necessary.

The charges against profit - a relatively common occurrence when new chief executives take the helm - could relate to defunct software projects, staff reductions and other changes to the UK operations and/or a top-up of the bank's bad debt provisioning.

Analysts believe Scottish-born Mr Stewart, who replaced Frank Cicutto on Monday to become the first outsider to run the bank in its 150-year history, could use the early phase of his tenure to clean up the bank's balance sheet.

The bank, according to analysts, carries its Integrated Systems Implementation (ISI) software program in its books at around $300 million, but aspects of the project have been deferred or made redundant. The bank has also run down its general provisioning for bad debts in recent periods, helping to boost its reported profits. But analysts believe the bank is not as conservatively provisioned as its peers.

Mr Stewart, who was originally appointed to fix NAB's four European banks, may also outline more spending to grow these operations sometime in the coming months, having already flagged the bank's lack of a significant presence in the wealthy southern part of England.

Wilson HTM's Brett Le Mesurier said: "He said he would take a listening phase for a month or so before forming his view on the right path to take. That path might include some radical restructuring or a more measured approach - but he's yet to come to the ultimate course of action."

Macquarie Equities' William Ammentorp said: "He seems to have been very well received so far. However, the emphasis is still on the UK and his and the bank's ability to generate sustainable profit growth from the UK while maintaining the Australian and New Zealand businesses' strong performance."

NAB shares fell 8c to $30.94.

Meanwhile, Mr Cicutto's $14 million payout, of which $3.27 million related to resignation payments and the rest to accrued leave, super and bonus, sparked more debate about excessive executive remuneration. Labor leader Mark Latham said the payout was "way over the top".

How the payments were calculated remains confidential, but JP Morgan analyst Brian Johnson said the $3.27 million did not seem to equate to the facts of his contract and appeared lower than the potential payout had NAB terminated his employment.

Mr Latham said he couldn't see how the payout was justified. "I don't think we should be rewarding failure at that huge financial expense," he told 2UE radio. "I don't think anyone deserves that much money, particularly in the circumstances he's in."

The Prime Minister, John Howard, said: "I can understand the irritation of the public when it looks as though somebody who hasn't done a good job . . . nonetheless walks away with a very big payout."

Labor plans amendments to the corporations law which would require shareholder approval for any golden handshakes for departing executives.